Thursday, March 17, 2011

On Tap for Heineken: New Focus on Draft Beer

Heineken is thinking outside the bottle, with plans to pour more marketing money into draft beer sold at bars and restaurants as it seeks to win over new customers and reverse slumping sales trends.

The move, which will include print, billboard and digital ads, marks a change in strategy for Heineken USA, which for more than a decade has focused on its iconic green short-neck bottles sold in stores. Now the importer sees opportunity for draft beer growth as more consumers sample premium craft brews served from the tap. Roster agency Euro RSCG, part of Havas, is handling the effort.

"For years draft beer was more about inexpensive beers served in plastic pitchers. It was more about a volume play for consumers," said Kheri Tillman, Heineken USA's VP-trade marketing and sales strategy. "But through the influence and dramatic increase and availability and quality of craft beers, [it's] really driven draft and made draft synonymous with quality."

Heineken USA, the nation's No. 2 beer importer, is much too large to be considered craft, but competes in the same premium beer arena.

Today, roughly 30% of all upscale beer brand sales are "on-premise," such as bars and restaurants, according to Heineken USA. And bars are key because that is where 60% of consumers say they try new beers -- purchases that often drive them to buy the same brand at the store. On-premise sales are about 20% of Heineken USA's business, which includes brands such as Dos Equis, Tecate and Amstel Light. For the Heineken brand, a majority of on-premise sales are in bottles. By contrast, Anheuser-Busch InBev's Stella Artois gets 80% of its on-premise sales from draft, according to Heineken USA. Draft sales are critical because tap handles often take center stage at bars. "Bartenders typically recommend those brands that are on draft," Ms. Tillman said.

The importer will spend more than $40 million on the on-premise push, including 80 new staff positions to help manage on-site accounts and emphasize draft. The ad campaign is still in development but will feature glassware and target 25 big markets. Executions will include billboard and bus stop displays, as well as print ads in local publications such as Time Out NY and Improper Bostonian. The more general brand-building campaign will position the Heineken drinker as a "cool, confident man of the world," and the brand will double the number of TV advertising weeks to 30.

The brand had $58 million in measured media spending last year. All Heineken USA brands had $124 million in measured media spending in 2010, according to Kantar Media.

The Heineken brand, whose modern era in the U.S. began in 1933 after prohibition was lifted, historically grew its business on-premise -- but mostly through bottle sales. Starting about 15 years ago, the importer shifted its focus to the store, as it sought to increase distribution. But the brand has struggled as of late. Shipments dropped by 4.9% in 2010, as its share of the import market fell from 17% to 15.5%, according to Beer Marketer's Insights. Competitor Corona Extra, the top import, managed to eke out a slight gain of 0.1%, although its market share dropped from 27.7% to 26.4%, a slower decline than Heineken, the No. 2 import brand.

Heineken's draft effort was recently unveiled to distributors at a meeting in Las Vegas, as part of the importer's larger growth strategy. This year's push will focus in part on the "celebration of beer," which seeks to tap into growing consumer interest in ingredients and craftsmanship, which again seems to be a nod to the growing influence of craft beers.

Here's a quick look at plans for other key brands:

The importer is expanding its target audience for Tecate, which had long been positioned for first-generation, blue-collar Hispanics with advertising that emphasized perseverance of Mexican immigrants. The new ads, by roster agency Kirshenbaum Bond Senecal & Partners' shop Ramona, go after more acculturated Hispanics using humor. Tecate, whose shipments fell 10% in 2010, will also test English-language ads. Tecate can no longer concentrate only on foreign-born drinkers because their proportion of the Hispanic population is expected to shrink in coming years, officials said.

Amstel Light is ditching the "Dam Good Bier" tagline, reviving "The Beer Drinker's Light Bier," which last ran in 2004. The move is meant to position the brew as a light beer that "tastes like a full strength beer." The brand's agency is Richards Group in Dallas.

Heineken Premium Light, which has struggled (shipments were down 8.1% in 2010, according to Beer Marketer's Insights), will get a new campaign this summer, replacing "See the Light," but the importer has yet to settle on new creative from Euro RSCG.

Newcastle Brown Ale, whose store sales were up 3.52% in the year ended Feb. 20, according to SymphonyIRI, will get its first TV campaign under Heineken USA, which acquired the brand in 2008. Ads airing in 12 markets encourage drinkers to "taste the lighter side of dark" and build off a digital effort last year that included one spot in which parents tell their son he is not their favorite but they please him nonetheless by giving him Newcastle. The brand's agency is San Diego-based Vitro.

It's full-speed ahead on Dos Equis' Most Interesting Man in the World effort, which has made the beer one of the hottest-selling imports, with shipments up 17.6% in 2010. The brand will seek to capitalize on growth by expanding distribution beyond Mexican restaurants to chains such as Buffalo Wild Wings and TGI Fridays. Euro RSCG is also Dos Equis's agency.